Chanderprabhu Jain College of Higher Studies & School of Law

CLASS & SECTION: BA LLB / BBA LLB IV (A,B&C)

SUBJECT: ADMINISTRATIVE LAW
CODE : LLB 208

CASE STUDY
Case name: Municipal Corporation, Ujjain & Anr. v. BVG India Limited and Ors.

Date of Judgement: March 27, 2018

Brief

In the case the Appellant had challenged High Court’s order, whereby the Court had set aside the
contract awarded in favour of Global Waste Management Cell Private Limited by Ujjain
Municipal Corporation for door to door collection and transportation of Municipal Solid Waste.

The tender floated by Municipal Corporation was awarded to Global Waste Management Cell
Pvt. Ltd. amongst the three bidders by getting the highest score. However, the award of contract
was challenged by the unsuccessful bidder (B.V.G. India Limited) before the High Court. The
High Court subsequently set aside the contract awarded to Global Waste Management Cell Pvt.
Ltd. Aggrieved by High Court’s decision, the Appellant Municipal Corporation approached the
Supreme Court.

In view of the facts and circumstances, the Supreme Court allowed the appeal and set aside High
Court’s order. One of the intrinsic issue on which the Apex Court elucidated was scope of
judicial review of administrative decisions.

ISSUES

While allowing the appeal, the Three-Judge Bench of the Supreme Court made the following
observations in the case:
The successful bidder was more technically qualified and it got more marks. Normally, the
contract could be awarded to the lowest bidder if it is in the public interest. Merely because the
financial bid of BVG India Ltd. is the lowest, the requirement of compliance with the Rules and
conditions cannot be ignored.

That a statutory That authority granting licences should have the latitude to select the best offer
on the terms and conditions prescribed. As clarified earlier, the power of judicial review can be
exercised only if there is unreasonableness, irrationality or arbitrariness and in order to avoid
bias and mala fides.

That evaluating tenders and awarding contracts are essentially commercial transactions/contracts.
If the decision relating to award of contract is in public interest, the Courts will not, in exercise
of the power of judicial review, interfere even if a procedural aberration or error in awarding the
contract is made out.

That the power of judicial review will not be permitted to be invoked to protect private interest
by ignoring public interest.

That attempts by unsuccessful bidders with an artificial grievance and to get the purpose defeated
by approaching the Court on some technical and procedural lapses, should be handled by Courts
with firmness.

That the exercise of the power of judicial review should be avoided if there is no irrationality or
arbitrariness.

While arriving at its decision, the Supreme Court heavily relied on its verdict in the case of Tata
Cellular v. Union of India[1], wherein the Court had remarked that the terms of the tender are not
open to judicial scrutiny as the invitation to tender is a matter of contract. Thus, only when a
decision making process is so arbitrary or irrational that no responsible authority proceeding
reasonably or lawfully could have arrived at such decisions, power of judicial review can be
exercised. However, if it is bona fide and in public interest, the Court will not interfere in the
exercise of power of judicial review even if there is a procedural lacuna. The power of judicial
review will not be permitted to be invoked to protect private interest by ignoring public interest.

JUDGEMENT

Scope of Judicial Review of Decisions Pertaining to Award of Contract

Under the scope of judicial review, the High Court could not ordinarily interfere with the
judgment of the expert consultant on the issues of technical qualifications of a bidder when the
consultant takes into consideration various factors including the basis of non-performance of the
bidder;

A bidder who submits a bid expressly declaring that it is submitting the same independently and
without any partners, consortium or joint venture, cannot rely upon the technical qualifications of
any 3rd Party for its qualification.

It is not open to the Court to independently evaluate the technical bids and financial bids of the
parties as an appellate authority for coming to its conclusion inasmuch as unless the thresholds of
mala fides, intention to favour someone or bias, arbitrariness, irrationality or perversity are met,
where a decision is taken purely on public interest, the Court ordinarily should exercise judicial
restraint.